Markets Rally on French-German Greece Talk

Key US stock indicesfollowed European stocks and the euro, all rallying on possible Greek deal. France's Sarkozy and Germany's Merkel had a problem: Germany wanted a haircut for bondholders, France did not. Now there is some kind of compromise, as Merkel said she would back "voluntary" debt rollover. What carrot will they offer to debtholders to make them stick with their Greek exposure when their current holdings (particularly the 2 year and under obligations) mature? We don't know, but details will probably come out this weekend. The one thing it will do is buy more time.

None of this helps the Greeks, as they still will have to pass an austerity budget and still can't pay their debts. Greek Prime Minister George Papandreou did not resign, he is just reshuffling his cabinet, firing his finance minister.

European banks like ING and Deutsche Bank are trading up about 3 percent.

And, just to show you what has become the latest momentum group, beaten up Chinese internet stocks like Dangdang , Yoku.com and Renren are trading up about 5 percent.

Elsewhere:

1) Bankrate (ticker: RATE) priced its IPO at $15 a share. The operator of consumer finance websites raised $300 million by pricing 20 million shares in the middle of its expected $14-$16 expected range. Read more about the company's prospects in yesterday's post.

I will have Bankrate's CEO, Tom Evans, first on CNBC, right after the stock begins trading this morning.

2) Capital One is acquiring ING Direct for $9.0 billion in a cash/stock combination. The deal will give ING a 9.9 percent stake in Capital One. Additionally, the proceeds from the asset sale will help ING to repay bailout funds from the Dutch government faster. On the news, ING rises 4 percent, while Capital One also rises about 1.5 percent.

This is a significant deal for COF: in one stroke, they have become the fifth largest bank by deposits ($200 billion). Tangible book value is exactly 1.0. The deal will be accretive to earnings at the close in late Q4 2011.

3) BJ's Wholesale rises 4 percent after private equity firms Leonard Green and CVC Capital confirmed it will submit a joint bid for the warehouse club. The terms of the offer were not disclosed. The filing also revealed that Leonard Green, which already acquired JoAnn Stores and J. Crew, has accumulated a 9.3 stake in the company.

4) Saks is reiterated at a buy at Citigroup. The analyst is encouraged by positive business trends, potential multi-channel growth opportunities, and the luxury retailer's ability to push higher price-point sales. It notes that the department store has been able to slash promotions by about 30 percent, giving a significant boost to margins.